IPG Photonics Continues to Deliver Record Results for Third Quarter of 2012
Revenues Grow by 21% and Net Income Increases 29%
High-Power and Pulsed Laser Sales for Materials Processing
Applications Drive Growth
Company Generates $38 Million in Cash from Operations
OXFORD, Mass.--(BUSINESS WIRE)--
IPG
Photonics Corporation (NASDAQ: IPGP) today reported financial
results for the third quarter ended September 30, 2012.
|
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Three Months Ended
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Nine Months Ended
|
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September 30,
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September 30,
|
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(In millions, except per share data)
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2012
|
|
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2011
|
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% Change
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2012
|
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2011
|
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% Change
|
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Revenue
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$
|
156.4
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|
$
|
129.1
|
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21%
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$
|
417.5
|
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$
|
351.0
|
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19%
|
|
|
|
|
|
|
|
|
|
|
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Gross margin
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55.0%
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54.6%
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|
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55.0%
|
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54.4%
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
$
|
60.0
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|
$
|
49.2
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22%
|
|
$
|
161.6
|
|
$
|
129.5
|
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25%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Operating margin
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38.4%
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38.1%
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|
38.7%
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36.9%
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|
|
|
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|
|
|
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Net income attributable to IPG Photonics Corporation
|
|
$
|
42.4
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|
$
|
32.9
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|
29%
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$
|
110.1
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$
|
86.7
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27%
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Earnings per diluted share
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$
|
0.81
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|
$
|
0.66
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|
23%
|
|
$
|
2.16
|
|
$
|
1.77
|
|
22%
|
|
|
|
|
|
|
|
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|
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Management Comments
"IPG's performance momentum continued into the third quarter by
delivering record results on the top and bottom lines," said Dr.
Valentin Gapontsev, IPG Photonics' Chief Executive Officer. "Revenues
grew by more than 21% over the prior year and net income increased by
29%."
"Materials processing sales increased by 21%, driven primarily by
high-power laser sales for automotive and general manufacturing
applications," said Dr. Gapontsev. "High-power laser sales increased
16%, while pulsed laser sales grew by 51% driven by increased demand for
consumer electronics applications. Medium-power laser sales grew by 11%,
primarily due to demand for thin metal cutting and welding in
micro-processing applications."
"Strength in the U.S. and Europe for cutting and welding applications in
automotive and general manufacturing, as well as marking and engraving
in consumer electronics, were the primary drivers of our record revenue
performance. In addition, advanced applications revenue benefited from
sales of several high-power and brightness lasers," said Dr. Gapontsev.
"Our growth in Europe was partially offset by lower demand in Russia. In
Asia, we continued to expand our business in Turkey, while Japan and
China both showed moderate growth."
"During the third quarter, IPG generated $38 million in cash from
operations," said Dr. Gapontsev. "A portion of that cash was used to
fund the acquisition of JP Sercel Associates, Inc., which we expect to
strengthen our product portfolio and accelerate IPG's penetration into
the fine-processing markets. We maintained a strong balance sheet,
ending the quarter with $372.6 million in cash and cash equivalents."
Business Outlook and Financial Guidance
"We expect to report strong year-over-year growth in the fourth quarter
as we continue to capitalize on the fundamentals that are driving our
business," said Dr. Gapontsev. "At the same time, we will face
challenges in the fourth quarter, including historical seasonality in
some markets and macro-economic pressures in a few key geographies. As a
result of these factors, our book-to-bill ratio was less than one in Q3.
Looking ahead, we remain confident that the fundamentals of our business
and competitive position are strong and we expect to continue to
displace incumbent technologies and add OEM customers as our lasers are
qualified for more applications."
IPG Photonics expects revenue in the range of $140 million to $150
million for the fourth quarter of 2012. The Company anticipates earnings
per diluted share in the range of $0.65 to $0.75 based on 52,102,000
diluted common shares, which includes 51,090,000 basic common shares
outstanding and 1,012,000 potentially dilutive options at September 30,
2012.
As discussed in more detail below, actual results may differ from this
guidance due to various factors including, but not limited to, product
demand, competition and general economic conditions. This guidance is
subject to the risks outlined in the Company's reports with the SEC, and
assumes that exchange rates remain at present levels.
Conference Call Reminder
The Company will hold a conference call to review its financial results
and business highlights today, October 31, 2012 at 10:00 a.m. ET. The
conference call will be webcast live and can be accessed on the "Investors"
section of the Company's website at www.ipgphotonics.com.
The conference call also can be accessed by dialing (877) 270-2148 or
(412) 902-6510. Interested parties that are unable to listen to the live
call may access an archived version of the webcast, which will be
available for approximately one year on IPG's website.
About IPG Photonics Corporation
IPG
Photonics Corporation is the world leader in high-power fiber lasers
and amplifiers. Founded in 1990, IPG pioneered the development and
commercialization of optical fiber-based lasers for use in diverse
applications, primarily materials
processing. Fiber lasers have revolutionized the industry by
delivering superior performance, reliability and usability at a lower
total cost of ownership compared with conventional lasers, allowing end
users to increase productivity and decrease operating costs. IPG has its
headquarters in Oxford, Massachusetts, and has additional plants and
offices throughout the world. For more information, please visit www.ipgphotonics.com.
Safe Harbor Statement
Information and statements provided by the Company and its employees,
including statements in this press release, that relate to future plans,
events or performance are forward-looking statements. These statements
involve risks and uncertainties. Any statements in this press release
that are not statements of historical fact are forward-looking
statements, including, but not limited to, strengthening the Company's
product portfolio, accelerating its penetration into the fine-processing
market, reporting strong year-over-year growth in the fourth quarter,
continuing to capitalize on the fundamentals that are driving the
Company's business, that the fundamentals of its business and
competitive position are strong, continued displacement of incumbent
technologies and adding OEM customers as IPG's lasers are qualified for
more applications, and revenue and earnings per share expectations for
the fourth quarter of 2012. Factors that could cause actual results to
differ materially include risks and uncertainties, including risks
associated with the strength or weakness of the business conditions in
industries and geographic markets that the Company serves, particularly
the effect of economic downturns; reduction in customer capital
expenditures; potential order cancellations and push-outs and financial
and credit market issues; the Company's ability to penetrate new
applications for fiber lasers and increase market share; the rate of
acceptance and penetration of IPG's products; effective management of
growth; level of fixed costs from its vertical integration; intellectual
property infringement claims and litigation; interruption in supply of
key components, including from transportation disruptions from natural
and man-made events; manufacturing risks; inventory write-downs; foreign
currency fluctuations; competitive factors, including declining average
selling prices; building and expanding field service and support
operations; uncertainties pertaining to customer orders; demand for
products and services; development of markets for the Company's products
and services; and other risks identified in the Company's SEC filings.
Readers are encouraged to refer to the risk factors described in the
Company's Annual Report on Form 10-K (filed with the SEC on February 27,
2012) and its periodic reports filed with the SEC, as applicable. Actual
results, events and performance may differ materially. Readers are
cautioned not to rely on the forward-looking statements, which speak
only as of the date hereof. The Company undertakes no obligation to
update the forward-looking statements that may be made to reflect events
or circumstances after the date hereof or to reflect the occurrence of
unanticipated events.
|
|
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IPG PHOTONICS CORPORATION
|
|
CONSOLIDATED STATEMENTS OF INCOME
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended September 30,
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
2012
|
|
|
2011
|
|
|
2012
|
|
|
2011
|
|
|
|
|
|
(in thousands, except per share data)
|
|
NET SALES
|
|
$
|
156,379
|
|
|
|
$
|
129,064
|
|
|
|
$
|
417,498
|
|
|
|
$
|
350,958
|
|
|
COST OF SALES
|
|
|
70,420
|
|
|
|
|
58,605
|
|
|
|
|
187,945
|
|
|
|
|
160,127
|
|
|
GROSS PROFIT
|
|
|
85,959
|
|
|
|
|
70,459
|
|
|
|
|
229,553
|
|
|
|
|
190,831
|
|
|
OPERATING EXPENSES:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
5,785
|
|
|
|
|
5,656
|
|
|
|
|
16,771
|
|
|
|
|
16,451
|
|
|
|
Research and development
|
|
|
7,762
|
|
|
|
|
6,501
|
|
|
|
|
22,131
|
|
|
|
|
18,842
|
|
|
|
General and administrative
|
|
|
10,609
|
|
|
|
|
10,997
|
|
|
|
|
29,294
|
|
|
|
|
27,499
|
|
|
|
Loss (gain) on foreign exchange
|
|
|
1,796
|
|
|
|
|
(1,927
|
)
|
|
|
|
(272
|
)
|
|
|
|
(1,413
|
)
|
|
|
|
Total operating expenses
|
|
|
25,952
|
|
|
|
|
21,227
|
|
|
|
|
67,924
|
|
|
|
|
61,379
|
|
|
OPERATING INCOME
|
|
|
60,007
|
|
|
|
|
49,232
|
|
|
|
|
161,629
|
|
|
|
|
129,452
|
|
|
OTHER INCOME (EXPENSE), Net:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income (expense), net
|
|
|
55
|
|
|
|
|
(209
|
)
|
|
|
|
541
|
|
|
|
|
(585
|
)
|
|
|
Other income (expense), net
|
|
|
205
|
|
|
|
|
145
|
|
|
|
|
(981
|
)
|
|
|
|
(465
|
)
|
|
|
|
Total other income (expense)
|
|
|
260
|
|
|
|
|
(64
|
)
|
|
|
|
(440
|
)
|
|
|
|
(1,050
|
)
|
|
INCOME BEFORE PROVISION FOR INCOME TAXES
|
|
|
60,267
|
|
|
|
|
49,168
|
|
|
|
|
161,189
|
|
|
|
|
128,402
|
|
|
PROVISION FOR INCOME TAXES
|
|
|
(17,832
|
)
|
|
|
|
(14,899
|
)
|
|
|
|
(48,357
|
)
|
|
|
|
(39,248
|
)
|
|
NET INCOME
|
|
|
42,435
|
|
|
|
|
34,269
|
|
|
|
|
112,832
|
|
|
|
|
89,154
|
|
|
LESS: NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS
|
|
|
-
|
|
|
|
|
1,400
|
|
|
|
|
2,740
|
|
|
|
|
2,481
|
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION
|
|
$
|
42,435
|
|
|
|
$
|
32,869
|
|
|
|
$
|
110,092
|
|
|
|
$
|
86,673
|
|
|
NET INCOME ATTRIBUTABLE TO IPG PHOTONICS CORPORATION PER SHARE:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.83
|
|
|
|
$
|
0.68
|
|
|
|
$
|
2.20
|
|
|
|
$
|
1.82
|
|
|
|
Diluted
|
|
$
|
0.81
|
|
|
|
$
|
0.66
|
|
|
|
$
|
2.16
|
|
|
|
$
|
1.77
|
|
|
WEIGHTED AVERAGE SHARES OUTSTANDING:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
51,090
|
|
|
|
|
47,483
|
|
|
|
|
50,204
|
|
|
|
|
47,298
|
|
|
|
Diluted
|
|
|
52,102
|
|
|
|
|
48,747
|
|
|
|
|
51,281
|
|
|
|
|
48,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
|
|
SUPPLEMENTAL SCHEDULE OF STOCK-BASED COMPENSATION
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
|
|
Nine Months Ended
|
|
|
|
September 30,
|
|
September 30,
|
|
(In thousands)
|
|
|
2012
|
|
|
|
2011
|
|
|
|
2012
|
|
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of sales
|
|
$
|
563
|
|
|
$
|
419
|
|
|
$
|
1,590
|
|
|
$
|
1,303
|
|
|
Sales and marketing
|
|
|
289
|
|
|
|
311
|
|
|
|
827
|
|
|
|
1,206
|
|
|
Research and development
|
|
|
334
|
|
|
|
252
|
|
|
|
976
|
|
|
|
789
|
|
|
General and administrative
|
|
|
973
|
|
|
|
897
|
|
|
|
2,965
|
|
|
|
2,882
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stock-based compensation
|
|
|
2,159
|
|
|
|
1,879
|
|
|
|
6,358
|
|
|
|
6,180
|
|
|
Tax benefit recognized
|
|
|
(655
|
)
|
|
|
(575
|
)
|
|
|
(1,938
|
)
|
|
|
(1,982
|
)
|
|
|
|
|
|
|
|
|
|
|
|
Net stock-based compensation
|
|
$
|
1,504
|
|
|
$
|
1,304
|
|
|
$
|
4,420
|
|
|
$
|
4,198
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
September 30,
|
|
|
December 31,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
(In thousands, except share and per share data)
|
|
ASSETS
|
|
CURRENT ASSETS:
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
372,569
|
|
|
|
$
|
180,234
|
|
|
|
Short-term investments
|
|
|
-
|
|
|
|
|
25,451
|
|
|
|
Accounts receivable, net
|
|
|
110,649
|
|
|
|
|
75,755
|
|
|
|
Inventories, net
|
|
|
135,121
|
|
|
|
|
116,978
|
|
|
|
Prepaid income taxes and income taxes receivable
|
|
|
13,968
|
|
|
|
|
13,285
|
|
|
|
Prepaid expenses and other current assets
|
|
|
18,296
|
|
|
|
|
11,855
|
|
|
|
Deferred income taxes, net
|
|
|
10,503
|
|
|
|
|
10,899
|
|
|
|
|
Total current assets
|
|
|
661,106
|
|
|
|
|
434,457
|
|
|
DEFERRED INCOME TAXES, NET
|
|
|
4,419
|
|
|
|
|
4,830
|
|
|
GOODWILL
|
|
|
3,113
|
|
|
|
|
-
|
|
|
INTANGIBLE ASSETS, NET
|
|
|
7,875
|
|
|
|
|
6,157
|
|
|
PROPERTY, PLANT AND EQUIPMENT, NET
|
|
|
195,153
|
|
|
|
|
155,202
|
|
|
OTHER ASSETS
|
|
|
6,719
|
|
|
|
|
7,486
|
|
|
TOTAL
|
|
$
|
878,385
|
|
|
|
$
|
608,132
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND EQUITY
|
|
CURRENT LIABILITIES:
|
|
|
|
|
|
|
|
Revolving line-of-credit facilities
|
|
$
|
4,900
|
|
|
|
$
|
7,057
|
|
|
|
Current portion of long-term debt
|
|
|
1,572
|
|
|
|
|
1,613
|
|
|
|
Accounts payable
|
|
|
14,291
|
|
|
|
|
11,122
|
|
|
|
Accrued expenses and other liabilities
|
|
|
55,733
|
|
|
|
|
47,285
|
|
|
|
Deferred income taxes, net
|
|
|
7,181
|
|
|
|
|
5,405
|
|
|
|
Income taxes payable
|
|
|
37,604
|
|
|
|
|
21,230
|
|
|
|
|
Total current liabilities
|
|
|
121,281
|
|
|
|
|
93,712
|
|
|
OTHER LONG-TERM LIABILITIES
|
|
|
13,191
|
|
|
|
|
8,961
|
|
|
LONG-TERM DEBT, NET OF CURRENT PORTION
|
|
|
14,341
|
|
|
|
|
15,726
|
|
|
|
|
Total liabilities
|
|
|
148,813
|
|
|
|
|
118,399
|
|
|
REDEEMABLE NONCONTROLLING INTERESTS
|
|
|
-
|
|
|
|
|
46,123
|
|
|
IPG PHOTONICS CORPORATION STOCKHOLDERS' EQUITY:
|
|
|
|
|
|
|
|
Common stock, $0.0001 par value, 175,000,000 shares authorized;
51,270,197 shares issued and outstanding at September 30, 2012;
47,616,115 shares issued and outstanding at December 31, 2011
|
|
|
5
|
|
|
|
|
5
|
|
|
|
Additional paid-in capital
|
|
|
506,854
|
|
|
|
|
332,585
|
|
|
|
Retained earnings
|
|
|
233,418
|
|
|
|
|
122,833
|
|
|
|
Accumulated other comprehensive loss
|
|
|
(10,705
|
)
|
|
|
|
(12,100
|
)
|
|
|
|
Total IPG Photonics Corporation stockholders' equity
|
|
|
729,572
|
|
|
|
|
443,323
|
|
|
NONCONTROLLING INTERESTS
|
|
|
-
|
|
|
|
|
287
|
|
|
|
|
Total equity
|
|
|
729,572
|
|
|
|
|
443,610
|
|
|
TOTAL
|
|
$
|
878,385
|
|
|
|
$
|
608,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IPG PHOTONICS CORPORATION
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30,
|
|
|
|
|
|
|
2012
|
|
|
|
|
2011
|
|
|
|
|
|
|
(In thousands)
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
|
Net income
|
|
$
|
112,832
|
|
|
|
$
|
89,154
|
|
|
|
Adjustments to reconcile net income to net cash provided by
operating activities:
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
19,168
|
|
|
|
|
18,182
|
|
|
|
Provisions for inventory, warranty & bad debt
|
|
|
14,762
|
|
|
|
|
11,859
|
|
|
|
Other
|
|
|
10,585
|
|
|
|
|
7,110
|
|
|
|
Changes in assets and liabilities that provided (used) cash:
|
|
|
|
|
|
|
|
Accounts receivable/payable
|
|
|
(34,344
|
)
|
|
|
|
(20,746
|
)
|
|
|
Inventories
|
|
|
(17,050
|
)
|
|
|
|
(52,261
|
)
|
|
|
Other
|
|
|
10,552
|
|
|
|
|
2,697
|
|
|
|
|
Net cash provided by operating activities
|
|
|
116,505
|
|
|
|
|
55,995
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(51,715
|
)
|
|
|
|
(34,750
|
)
|
|
|
Proceeds from short-term investments
|
|
|
25,452
|
|
|
|
|
-
|
|
|
|
Acquisition of businesses, net of cash acquired
|
|
|
(11,596
|
)
|
|
|
|
(450
|
)
|
|
|
Other
|
|
|
(313
|
)
|
|
|
|
189
|
|
|
|
|
Net cash used in investing activities
|
|
|
(38,172
|
)
|
|
|
|
(35,011
|
)
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
Line-of-credit facilities
|
|
|
(1,958
|
)
|
|
|
|
585
|
|
|
|
Principal payments on long-term borrowings
|
|
|
(1,848
|
)
|
|
|
|
(1,046
|
)
|
|
|
Purchase of noncontrolling interests
|
|
|
(700
|
)
|
|
|
|
-
|
|
|
|
(Purchase) sale of redeemable noncontrolling interests
|
|
|
(55,400
|
)
|
|
|
|
19,973
|
|
|
|
Exercise of employee stock options and issuances under employee
stock purchase plan
|
|
|
8,145
|
|
|
|
|
12,001
|
|
|
|
Proceeds from follow-on public offering, net of offering expenses
|
|
|
167,963
|
|
|
|
|
-
|
|
|
|
|
Net cash provided by financing activities
|
|
|
116,202
|
|
|
|
|
31,513
|
|
|
|
|
|
|
|
|
|
|
|
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS
|
|
|
(2,200
|
)
|
|
|
|
(3,771
|
)
|
|
NET INCREASE IN CASH AND CASH EQUIVALENTS
|
|
|
192,335
|
|
|
|
|
48,726
|
|
|
CASH AND CASH EQUIVALENTS — Beginning of period
|
|
|
180,234
|
|
|
|
|
147,860
|
|
|
CASH AND CASH EQUIVALENTS — End of period
|
|
$
|
372,569
|
|
|
|
$
|
196,586
|
|
|
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
553
|
|
|
|
$
|
809
|
|
|
|
Cash paid for income taxes
|
|
$
|
20,967
|
|
|
|
$
|
19,465
|
|
IPG Photonics Corporation
Tim Mammen, 508-373-1100
Chief
Financial Officer
or
Sharon Merrill
Dennis Walsh,
617-542-5300
Senior Consultant
Source: IPG Photonics Corporation
News Provided by Acquire Media